The State Bank of India provides a loan amount between Rs. 10,000 and Rs. 20 lakh to customers against the gold assets, such as bank-purchased gold coins and jewellery. The loan can be availed by pledging the ornaments with the bank. The application process is simple and involves only minimum paperwork. With interest rate starting as well as 10.05% to 10.25%, gold loan SBI can be applied for by individuals who are above 21 years of age. Any person can apply either jointly or singly. He/she must have a steady source of income, can be salaried or self-employed individual, pensioner, even housewife etc.
Through the years, gold loan scheme by SBI has improved. Traditional jewel loan could be applied only offline by visiting the bank branch and meeting with the executive to understand about the different schemes. Nowadays, the online gold loan application by the bank has made the application process simpler and quicker. A person can even apply for gold loan from his bank’s account. With advent of the internet, the lending sector has found a new meaning, and the State Bank has optimized on the opportunity by bridging the gap between customers and its gold loan offers.
No proof of income is needed. The repayment of principal amount can commence after the end of tenure, or monthly along with interest component. In bullet repayment method, the person has to pay only the interest component during loan tenure. The bank will maintain a margin of 25 percent of the gold’s value, as RBI has mandated the loan to value ratio as 75 percent, maximum.
Earlier the applicants had to visit the premise of SBI with gold for evaluation process. It is still mandatory now, but doorstep service is available for those who have high amount of gold and find it risky to visit the bank branch for the fear of theft or damage. In particular cases, the applicants can request for a doorstep service. An expert comes over to the given address where the verification and gold valuation procedure are complete. The loan amount gets transferred to the bank account of the person.
At the onset of gold loan, SBI was primarily focussed to provide finance to agriculturists and farmers like other major loan against gold providers in India. Gradually, the bank started offering the loan to urban areas and people who wanted urgent monetary support. Today, the loan can be utilized to fund a number of needs and acts almost like an unsecured personal loan, but at better rates and terms. The loan is usually taken for travel, wedding, education, business, home repair, medical treatment, debt consolidation etc.
The credit score of the borrower is not a worry when it concerns a loan against gold. However, those with 550-600 CIBIL score have a better chance of receiving a higher loan amount than those with lower credit scores. However, this detail will only influence the amount of loan, and not become a factor for loan rejection or approval. As NPAs are increasing, SBI is becoming more careful about the financial profile of the borrowers.
Gold loans are relatively a less risky lending option for the bank as they have the choice to auction off the gold asset in case the person defaults at repayments. Yet, SBI takes precaution against loan fraud and defaulters.
Now-a-days it's easy to calculate the installment amount using various SBI gold loan calculator available online. It will give you an idea of approximate EMI depending on your loan amount and tenure. It's imperative to know the EMI and evaluate your repayment capacity before applying for the gold loan
GST and processing fee will be applied over and above the other cost to the loan. SBI asks for 0.50% of the total loan amount as the processing fee. Presently, State Bank of India charges interest rate that is 2 percent over the marginal cost of funds for 1 year. Gold appraiser charges are to be paid by the borrower. All the policies and charges are informed about upfront to the borrower, which is a facet they have improved on, past a few years.
While SBI used to accept payment for gold loan via only limited payment channels, the same is not broadened. One can even pay online manually or request for auto-debit. The repayment channel is not restricted to cheque alone. Thus, people have more options to send the payment towards the loan. The internet application makes for instant payment within a click. The borrower can even keep a check on the balance amount and get a complete amortization schedule, along with report of the repayments.
In times of crisis and natural disasters, SBI has come forward to support people by slashing interest rates and fees on gold loans. Recently, due to Kerala flood, thousands of people lost their means of livelihood and home. The State Bank of India came ahead to help the borrowers from the Southern part of the country, by reducing the rate of interest on the loan and relaxing some of the terms and conditions, which would otherwise apply in normal circumstances.
The above-given is a brief about the journey of SBI gold loans in India and how it has become more borrower-centric with passing of time.